Rio Tinto: The Mining Giant Pollutes Indonesia's Environment

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Case Details:

Case Code : BECG030
Case Length : 16 Pages
Period : 2003
Pub. Date : 2003
Teaching Note :Not Available
Organization : Rio Tinto
Industry : Mining
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Indonesia - Paying for Rio Tinto's Operations

The mining industry, an integral part of any economy, happens to be an easy target for environmentalists. This is because almost all mining projects cause environmental damage and are also responsible for disturbing the living habits and lifestyles of the indigenous people. Large scale topographical changes are common and the land where mining activities are carried out invariably get changed/damaged.

More harmful than these are the contaminations caused by tailings (solid waste left after the processing of ore) and waste water (water used for treating the mining waste) disposal. Mining organizations have to set up a massive infrastructure in and around the mines (roads, buildings etc.) besides bringing in their staff, who stay there for extended periods of time. This leads to a disturbance in the way of life of the people originally living in these areas. Often cultural clashes arise as the local people are displaced from their land, which deprives them of their self reliance and destroys their sense of belonging. Unlike in developed countries, the adverse impacts of mining activities are much more severe and destructive in developing countries...

Taking Remedial Action

Rio Tinto was fully aware of the damage all the negative publicity was causing to its image as a socially responsible company. In addition to the rehabilitation measures, the company had in fact taken many other remedial steps to salvage its reputation.

In 1997, Rio Tinto claimed that it had stopped using 'old' mining practices and adopted a new approach, which was guided by the document entitled 'The Way We Work' (Refer Exhibit III for the company's environmental policy listed in the document). Thereafter, the company even claimed to be the 'industry leader' in adopting a community friendly approach.

However, environmentalists criticized the document itself for lack of verifiable and enforceable standards and the company's reliance on fine sounding, but not binding, aspirations. To further strengthen the claims about their sincere efforts, Rio Tinto held a forum for NGOs in London in May 1998, where the 'The Way We Work' document was circulated for comment...

Excerpts Contd... >>


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